Given an Open Economy with High Capital Mobility and Floating

question 2

Multiple Choice

Given an open economy with high capital mobility and floating exchange rates,suppose an expansionary fiscal policy is implemented to combat recession.The initial and secondary effects of the policy

• A) cause aggregate demand to increase,thus strengthening the policy's expansionary effect on real output
• B) cause aggregate demand to decrease,thus eliminating the policy's expansionary effect on real output
• C) have conflicting effects on aggregate demand,thus weakening the policy's expansionary effect on real output
• D) have conflicting effects on aggregate demand,thus strengthening the policy's expansionary effect on real output

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Definitions:

Stereotyping

The act of categorizing individuals into specific groups based on generalized traits, without acknowledging individual differences.

Blaming The Victim

A phenomenon where the victim of a crime or any wrong is held entirely or partially at fault for the harm that befell them.

Group Polarization

The phenomenon whereby a group’s prevailing attitudes or beliefs become stronger or more extreme following group discussions.

Groupthink

Groupthink refers to a psychological phenomenon where the desire for group consensus and harmony results in an irrational or dysfunctional decision-making outcome.